. Mine and mill throughput expansion from 3,500 to 4,200 tonnes per day to be completed in 2021 and Mineral Reserves increase to 5.4 million ounces
Lundin Gold Logo (CNW Group/Lundin Gold Inc.)

VANCOUVER, BC, Dec. 8, 2020 /CNW/ - Lundin Gold Inc. ("Lundin Gold" or the "Company") (TSX: LUG) (Nasdaq Stockholm: LUG) is pleased to announce its 2021 guidance, a 20% expansion of the mine and mill throughput and an 8% increase in Mineral Reserves estimates at its Fruta del Norte gold mine ("Fruta del Norte") in Ecuador. All amounts are in U.S. dollars unless otherwise indicated. View PDF version

Highlights:
•2021 production is estimated between 380,000 to 420,000 ounces ("oz") based on an average head grade of 10.4 grams per tonne ("g/t") and an average gold recovery of 90%
•At a cost of $18.6 million, throughput expansion capital is projected to result in a 20% increase in mine and mill production from 3,500 to 4,200 tonnes per day ("tpd")
•Probable Mineral Reserves increase by 8% to 5.41 million oz at 8.1 g/t primarily as a result of a change in mining method from Drift and Fill to Long Hole Stoping

"Less than one year after reaching commercial production, we are embarking on an expansion of the mine and mill at Fruta del Norte. With this added gold production coming online in the last quarter of 2021, we will increase the average annual gold production from 325,000 oz per year to 340,000 oz per year over the life of mine," said Ron Hochstein, President and CEO of Lundin Gold. "Our increase in probable reserves demonstrates the further upside potential we see in the ore body, and we anticipate adding even more to these estimates upon completion of an underground drilling program which began last month. Fruta del Norte continues to be one of the few multi-million ounce, high-grade gold assets in production."

2021 Guidance
Gold production at Fruta del Norte for 2021 is estimated to be between 380,000 to 420,000 ozs. Mill production is estimated at an average rate of 3,500 tpd until the fourth quarter when production is planned to ramp up to 4,200 tpd following completion of the planned mill expansion. The head grade is estimated to average 10.4 g/t, with variations expected during the year as different sections of the ore body are mined. Average mill recovery for the year is estimated at 90%.

All-in-Sustaining-Costs ("AISC")[1] for 2021 are expected to range between $770 and $830 per oz of gold sold. AISC for 2021 reflects continuing COVID-19 costs, reaching steady-state maintenance programs and high sustaining capital resulting from the completion of the first and second raises of the tailings dam for the increased throughput and from other one-time improvements at the mine site some of which had to be deferred this year due to COVID-19. The Company has assumed that COVID-19 protocols at Fruta del Norte will remain in place for the full year; which represents a cost of approximately $27 per oz.
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1 Refer to "Non-IFRS Measures" at the end of this news release.

Total sustaining capital is estimated at $32.6 million, of which $14.6 million is for tailings dam construction, $5.4 million for a resource expansion drilling program, and $5.5 million for surface infrastructure. The remainder is for underground infrastructure and technology and other efficiency improvements and additional small projects in the plant and on surface.

In addition, the Company is planning to complete the South Ventilation Raise near the end of the first quarter of next year, which is critical to achieving expansion mining rates. Lundin Gold also expects to complete construction of the Zamora River bridge, the only remaining scope of work under the original Project. These two projects have a combined cost of $9.5 million.

In 2021, Lundin Gold will also embark on a $11 million, 9,000 metre drilling program on two high priority exploration targets in its portfolio of concessions, Barbasco and Puente-Princesa, which are located along the Suarez Pull-Apart Basin approximately seven kilometres from Fruta del Norte.

Throughput Expansion Study

The results of a recently completed internal expansion study confirm that a throughput rate of 4,200 tpd can be achieved at an estimated capital cost of $18.6 million. Based on these positive results, the Company plans to commence construction in the first quarter of 2021, followed by the mine ramping production to 4,200 tpd in the third quarter and the mill in the fourth quarter of 2021. It is anticipated that the expansion can be completed with minimal disruption to operations and be funded by cash flow from operations.

The project entails the purchase of two 45 tonne mine haul trucks, one in 2021 and one in 2022, additional rougher flotation capacity, the installation of a third gravity concentrator, a second concentrate filter press and a second tailings paste pump. Detailed engineering has commenced and orders for the key pieces of equipment have been placed.

The throughput expansion modifications are expected to improve mill recoveries through the addition of retention time in the flotation process of the plant.

The throughput expansion project is not expected to impact any of the undisturbed area around the site and is within the scope of the Environmental and Social Impact Assessment for Fruta del Norte approved by the Ecuadorian Government. The Company intends to notify the Ecuadorian Ministry of Environment and Water this month in relation to the expansion plans.

Increase in Mineral Reserves

Due to changes in planned mining method, the Company has updated its estimates of Probable Mineral Reserves for Fruta del Norte ("2020 Reserve") to 5.41 million oz, an increase of 427,000 ozs compared to the 2019 year end reconcilation of Probable Mineral Reserves presented in the Company's Annual Information Form (the "AIF"), dated March 24, 2020. The 2020 Reserve, which is effective as of July 31, 2020, is as follows:

Table 1. Probable Mineral Reserves(1)
AIF(2)(3)(4)(5)(6)
2020 Reserve(2)(3)(4)(5)(6)
Mt 17.6 20.8
Au (g/t) 8.74 8.1
Au (Moz) 4.99 5.41
Ag (g/t) 12.1 11.8
Ag (Moz)6.92 7.68

See "Additional Technical Information" below for further information on the 2020 Reserve.

The increase in the 2020 Reserve is primarily due to the conversion of a significant portion of the sections of the ore body originally mined by Drift and Fill to Long Hole Stoping, based on the good ground conditions experienced in the mine to date, which resulted in a slight increase in dilution and decrease in average grade. There was no increase in estimates of Mineral Resources for Fruta del Norte.

The new Life of Mine Plan, which is based on the 2020 Reserve and throughput expansion, provides for a total of 4.8 million oz of gold production over a 14 year mine life to 2034. The annual average gold production over the first five years (2021 – 2025) is estimated at 390,000 oz, and for the life of mine (2021 - 2034) is estimated at 340,000 oz.